(The Center Square) – A new report found Michigan’s economic standing has plummeted since 20 years ago and now ranks 39th in personal income per capita among the 50 states.
Twenty years after the first edition of Michigan Future, Inc. and the University of Michigan’s report titled “A New Path to Prosperity? Manufacturing and Knowledge-Based Industries As Drivers of Economic Growth” was released, an updated version found that Michigan needs to change its economic development strategy if it wants to achieve prosperity.
“With Michigan’s new focus on becoming a more prosperous state, one that attracts and retains young talent, we looked to the report we issued in 2004 to see how our analysis held up over time, which we found it did – and with severe implications,” Michigan Future, Inc. President Lou Glazer said in a statement. “Michigan needs to change how it approaches economic development if it wants to be a prosperous state again.”
The 2004 report said Michigan must focus on the “knowledge economy” – higher-paying, information-based jobs to attract and retain more young, college-educated adults.
About 20 years later, the updated report found the shift didn’t happen.
Instead, if each state’s personal income per capita grew over the next 23 years at the same rate that it did between 1999 and 2022, Michigan would end up as the 48th poorest state in the country by 2045, just above Alabama and Mississippi.
“When we first compiled the data in 2004, we feared that without a recognition of the new drivers of prosperity, we risked falling behind,” Donald Grimes, an economist at the Research Seminar in Quantitative Economics, part of the Department of Economics in the College of Literature, Science, and the Arts at the University of Michigan, said in a statement. “Nothing really changed and Michigan is now one of the nation’s poorest states.”
Michigan’s per capita income in 2022 was 13% below the national average, the lowest Michigan has been compared to the nation since the data was first compiled in 1929. This is the opposite of where Michigan was in the 20th Century when the state was structurally a relatively high-prosperity state. In 1999, Michigan ranked 16th in per capita income, slightly below the national average.
The researchers say knowledge-based industries and young professionals will be the most important drivers of future economic growth and those communities are likely to be most prosperous.
“I said this when the report was issued in 2004 and I’ll say it again: the best use of policymakers’ time and attention with respect to the economy would come from developing a new agenda on how best to grow a knowledge-based economy in Michigan,” Glazer added. “If Michigan doesn’t become competitive in the knowledge economy, it will be one of the poorest states. Michigan policymakers must change their approach to the knowledge economy if they want to turn our economic decline around.”
